Some Thoughts Regarding Mari Invest Income Solution and its Underlying Income Unit Trust.

Maribank made a press release yesterday regarding a new investment product that they released.

It is called Mari Invest Income and currently it is by invitation only so likely this is more of “what is to come”. I guess if they provide a press release, they should want it to do well.

I just want to make a few quick comments about it but here is a little background on Maribank before my comment.

Who is Maribank?

MariBank is owned by Sea Group, a Singapore-based technology conglomerate. Sea Group is the parent company of well-known brands like:

• Shopee: A leading e-commerce platform in Southeast Asia and Taiwan.
• Garena: A global digital entertainment company and game developer.
• SeaMoney: A digital financial services platform.

Sea Group obtained a digital full bank license from the Monetary Authority of Singapore (MAS) in 2020, enabling it to operate MariBank as part of its financial services expansion. Launched in March 2024, MariBank offers a range of personal and business banking services through its mobile application.

Maribank currently offers personal and business banking services.

The personal banking services includes:

1. Mari Savings Account: Daily interest accrual without minimum deposit, salary crediting or spending requirements.
2. Mari Invest: Things like Mari Invest SavePlus, which is a unit trust setup with LionGlobal owning short term fixed income cum money markets and this Mari Invest Income
3. Mari Credit Card: Unlimited cashback on various spending categories, including Shopee purchases, with no minimum spending required.

What is in Mari Invest Income?

Mari Invest Income is a higher risk, but still considered an intermediate investment risk solution to their Mari Invest SavePlus.

Both of them are unit trust based, and if it is unit trust based, you need to understand the returns, volatility, and risk will depend on what the unit trust holds.

Mari Invest Income is a wrapper around a very popular fixed income unit trust call the PIMCO GIS Income Fund.

Now here is a few things we know about the wrapper Mari Invest Income:

1. You can manage it with a MariBank app
2. You can invest with a minimum of S$1
3. Since this unit trust (GIS Income) has a regular payout, you can review your payouts if you click into Mari Invest Income
4. There is no transaction, upfront, sales fees charged by Maribank
5. There is no ongoing fees charged by Maribank

A little about the PIMCO GIS Income fund

1. The overall returns and payout of Mari Invest Income will depend on the performance of the PIMCO GIS Income fund.
2. The fund is an actively managed fund managed by their star man Group CIO Daniel Ivascyn and Alfred Murata.
3. The goal of the fund is to provide a payout.
4. There are different fund classes with some distributing payouts and some that doesn’t. This one does.
5. Mari Invest Income will be investing in the Admin SGD Hedged class.
6. The ongoing fees for the Admin SGD Hedged class is listed as 1.05% p.a. You won’t pay for this fee out of your pocket when you invest in Mari Invest Income but your performance and payout will be net off this fee periodically.
7. The management fee is in this ongoing fee. The trailer fees, paid by the fund (PIMCO) to the distributor (in this case Maribank) or adviser, is in this ongoing fee as well.
8. As a whole this fund is huge with 90 billion of net assets (31 Jan 2025)
9. The common pitch for a fund like the PIMCO GIS Income Fund is its good historical return (4.09% p.a. since inception) but a consistent monthly payout that is nearly 6.49% p.a. based on the historical distribution as of 31 Dec 2024. There are a lot of people who needs income and are therefore lured by the lucrative payout.
10. The payout is seen as a dividend and is not guaranteed.
11. The payout experience going forward may be different from the past.
12. GIS Income has been the rare fund that maintains a rather consistent and increasing per unit payout. In my experience looking at unit trust, I have not seen as consistent of payout record as GIS Income. The income distributed have stay stagnant from 2013 to 2020 before climbing as the interest rate go up (E USD Inc fund class).
13. Since the underlying is fixed income, total returns are fixed income like. Fund will suffer as fixed income suffers.
14. Since the fund is actively managed, the fund’s fixed income allocation can be different from a benchmark index such as a Bloomberg Global Aggregate bond Index (BBGA for short and easy reference for this article).
15. The estimated gross yield to maturity is 7.25% versus 3.69% for BBGA
16. The current yield, which measures the estimated total coupon and dividend received divided by the price, is 4.7% versus 2.79% for BBGA
17. The Effective Duration is 4.6 years versus 6.4 years for BBGA
18. Maturity is 6.48 years versus 8.33 years for BBGA
19. The biggest difference for PIMCO GIS is that it holds nearly 36% in Federal National Mortgage Association (FNMA), or mortgage backed securities. FNMA securities can offer high yields compared to other fixed income. They benefit from rising interest rate environment as the borrowers of the mortgage slowed payments and when payments slowed, the securities lock in higher interest rate payments which means more interest for unit holders. FNMA MBS is implicitly backed by the US government. You can view this as a guarantee or not but it sort of make the credit rating lean closer to US Treasury. There are risks such that if prepayment happens over time, the funds expected yield will go down. FNMA MBS may not appreciate as much when interest rate fall. They also tend to be more sensitive to interest rate. If you are interested in the solution, you better be interested in the nuances of FNMA mortgage backed securities.

One thing to note is that Mari Invest is using the Admin SGD Hedge Class.

There are a lot of PIMCO GIS Fund class and I will list them out here:

1. ADMIN AUD Hedged Inc
2. ADMIN EUR Hedged Acc
3. ADMIN EUR Hedged Inc
4. ADMIN GBP Hedged Inc
5. ADMIN HKD Unhedged Inc
6. ADMIN SGD Hedged Inc
7. ADMIN USD Acc
8. ADMIN USD Inc
9. E USD Acc
10. E USD Inc
11. HINST USD Acc
12. HINST USD Inc
13. INST USD Acc
14. INST USD Inc
15. INVST USD Acc
16. INVST USD Inc

There are a lot more fund classes that I don’t have time to list out. There are different class because off different currency denomination, whether they are hedge or unhedged, whether they are paying out income or not, but also different degree of ongoing fees.

So here is the breakdown of the different degree of ongoing fees:

• ADMIN: 1.05% p.a.
• E: 1.45% p.a.
• HINST: 0.72% p.a.
• INST: 0.55% p.a.
• INVST: 0.90% p.a.

The amount of fees you paid, when invested in the PIMCO GIS Income fund will differ based on the fund class used. The E class is usually for retail, and what you find in the Bank, and online distributors. You pay the most fees through that. The institutions usually go for INST which pays the lowest fee.

So how it goes is:

You buy the PIMCO GIS Income fund -> PIMCO calculates fees to deduct to pay

|-> Themselves

|-> Fund distributors like Maribank

|-> Fund distributors like IFAST, Dollardex, Phillips -> Pay the advisory firm

In this way, you kind of know how Maribank will be renumerated.

Solution Aside, Here is What You Should Focus On

I think what investors should be aware of is the fees that they are paying, and whether you can get it more cheaply. But more importantly, investors need to understand:

1. What is this solution and what is the underlying (in this case PIMCO GIS Income fund)
2. What is the risk of the the investment, which is usually based on the underlying securities.
3. Why do you need this stuff and what role does it play in your overall plan? How much of a commitment?
4. What is the risk that you are facing when you invest in such a product.

This should be something for readers to think about.

It is pretty common for me to see readers being enticed by the nice payout and the distributions and completely forget about where they are in their financial life, their overall financial plan. Ask how these stuff fits in more than just keep buy buy buy buy..

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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.

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